A big shout out to the Realtor’s Association of Edmonton for getting their monthly report out extremely quickly this month! The numbers we reported yesterday are correct, sales are down in Edmonton:
“Our members report that there are a lot of potential buyers in the market but many are not ready to commit,” said Marc Perras, president of the REALTORS® Association of Edmonton. “They are being cautious and hoping for further price drops or lower interest rates that reflect the current global economic situation.”
In other words, it’s a buyer’s market. When it comes to defining the market there are a couple of methods out there (that I know of). One is the new listings to sales ratio:
The other is the absorption rate (based on inventory instead of new listings):
Clearly there is some discrepancy between the two methods, but for the most part they will match up. Sometimes you just have to go by your gut feeling, and what is happening out on the street and one thing is for sure…it’s a buyer’s market!
So what else happened in November? Well, first off homes took longer to sell (63 days), that is normal for this time of year, although 63 is longer than average for November.
The number of new listings fell to within the normal range:
And inventory dropped as well, although not as far as I’d like to see:
Since there is a direct correlation between inventory and average sale price:
Trying to figure out what to expect in the coming months is kind of like trying to figure out who’s going to be running the government of Canada. What I do expect is that sales will be softer than normal until something happens to signal confidence in the financial and credit markets. That’s a lot to ask Santa for Christmas though unless of course Santa cancels Christmas due to the inability to pay his elves.
It’s truly a buyers market when prices go back to pre 2006 levels in my mind. Prices are still way too high.
Market needs a correction of around 40% from the current price to be called a buyer’s market.
Good job for always sending positive signals to folks even in these dire times. May God bless you and your delibrate optimism
Never thought I’d see those words on this website. Wow, now if prices just go down a little more…..
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According to your absorption graph above the sellers-buyers market line is at 6 months.
According to Alberta Finance and Canadian Real Estate association the sellers market is below 2 months (sales to inventory greater than 50%), balanced market between 2 and 3 months (sales to inventory 35% to 50%) and buyers market above 3 months (sales to inventory below 35%).
http://www.finance.alberta.ca/aboutalberta/spotlights/2008_0604_alberta_housing_market.pdf
Has the criteria changed since June?
If yes, then for what are the reasons for the change and what is considered a balanced market now?
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Regarding BAD’s comments…
There are definitely different definitions of what exactly constitutes a buyer’s market. In the article you linked to (good article by the way) they are using a percentage of sales/inventory and shows what percentage of properties will sell in that month. I am using the absorption rate which is in months (inventory/sales), and shows how many month’s worth of supply there is. To be fair, I think that there should be a range of absorption rates that would be considered a balanced market but sometimes I think it’s just easier to draw a line.
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Sara,
Again, 6 months (inventory/sales) is equivalent to 17% of sales to inventory (sales/inventory * 100%)
The CREA definition of a balanced market is 35% to 50% which is equivalent to 2 to 3 months in absorption rate. Thus the absorption rate over 3 months would indicate buyers market, yet your graph places that line at 6 months (17% sales to inventory).
Again did the criteria for buyers market change from 35% (or 3 months) to 17% (or 6 months) since June? If yes, any particular reason for it?
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As I said, there are many different ways to define a buyer’s market. I have heard of absorption rates between 3 and 8 months defining a buyer’s market. 6 months was what I heard the most for Edmonton so that is what I used… perhaps it needs to be adjusted, but for the most part the sales to new listings ratio and the absorption rate have been right in line with each other.
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Sara,
Does that mean that the CREA definition is questionable?
I know that they are using the inverse of absorption rate but that does not really matter as it is the same statistic.
That prompts another question. Should a questionable definition be used at all? Why not leave the sellers-balanced-buyers market boundary out of that statistical measure if it is unreliable?
Using different definitions in different places/times leads to confusion and can be misleading.
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